10 Soybean Traders Convicted

January 10, 1991|By John Gorman and Laurie Cohen.

In a major victory for federal prosecutors, 10 soybean traders were convicted Wednesday of scheming to defraud customers at the Chicago Board of Trade while lining their own pockets through a series of illicit trades.

Wives of several defendants wept bitterly in court as the verdicts were read by the jury of 10 women and 2 men.

The jury had deliberated for three weeks before returning a verdict that found eight of the defendants guilty of violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), a crime that carries the potential penalty of the forfeiture of the defendants` assets, including their homes and their exchange seats, now worth $310,000 each.

One defendant, William Barcal, was found innocent under the RICO statute but was convicted of multiple mail fraud and commodity law violations.

Another defendant, John Ryan, wasn`t charged under RICO but was convicted of four other felony charges.

The eight men convicted of RICO charges face a maximum 20-year prison sentence. Mail fraud carries a potential five-year sentence on each count.

An ebullient U.S. Atty. Fred Foreman met reporters in the Dirksen Federal Building lobby after the verdict, accompanied by Assistant U.S. Attorneys Ira Raphaelson and Thomas Durkin.

``People are going to have greater confidence when they invest in the future in these markets,`` Foreman said.

The verdict caps the second trial in the investigation of Chicago`s futures markets, the world`s largest. Last July, a jury delivered a far more ambiguous verdict in a case from the Chicago Mercantile Exchange, convicting one Swiss franc trader of 20 charges and another trader of only one charge, and acquitting a third of violations of commodity law.

Wednesday`s verdict also answers questions about the government`s intention under Foreman to continue commodity prosecutions. A number of defense attorneys had questioned that resolve in the light of the July verdicts.

``What this means is the next wave of indictments will go forward,``

predicted Chicago attorney James McGurk, who represents several traders who have been told they are targets of the investigation.

Wednesday`s verdict also serves to dampen criticism that surfaced shortly after news of the investigation was made public in January 1989. Prosecutor Raphaelson addressed that criticism:

``All 10 were convicted of the fraud theory we were told wouldn`t hold water. We have been criticized by several agencies, and the media has printed these criticisms. We said we would answer our critics in the courtroom. The jury has done that today.``

Traders and defense attorneys had argued that the violations included in the government charges merely were violations of Board of Trade rules, not crimes.

Upon hearing the verdict, Board of Trade Chairman William F. O`Connor defended the exchange:

``While any indictment or conviction is one too many for us, everyone should understand that the number of members indicted was less than two-thirds of 1 percent of our membership.``

The Board of Trade announced late Wednesday that it had suspended all 10 traders, pending internal disciplinary proceedings.

Lawyers for the 10 traders vowed to appeal the verdicts.

The three-month trial, which began in September, featured testimony of FBI special agent Richard Ostrom, who worked undercover at the Board of Trade from 1986 until word of the investigation leaked out early in 1989.

During his time on the floor, where he transacted trades, Ostrom tape-recorded the defendants in incriminating statements. Also crucial to the prosecution was the testimony of three indicted traders who became government witnesses, John N. Eggum, James D. Nowak and David J. Skrodzki.

In their arguments to the jury, defense attorneys attacked the three government witnesses as liars who were not to believed.

Thomas Breen, attorney for broker Thomas P. Kenney, attacked Eggum as

``an out-and-out liar . . . who doesn`t care who he trickbags.`` Eggum, who pleaded guilty prior to trial, testified that he engaged in a series of illegal trades with Kenney and others.

Kenney was convicted of 17 felonies, including RICO charges, but was acquitted of 12 other charges.

In his final say, attorney Michael Monico, representing John A. Vercillo, argued that Nowak was so eager to please prosecutors that he lied about his dealings with Vercillo. Nowak pleaded guilty prior to trial to RICO charges and promised to testify for the government if called upon.

Vercillo, a former Chicago police officer, was convicted of 11 felonies, including RICO charges, and acquitted of one felony.

Bradley Ashman, one of two defendants to take the witness stand, asserted that he didn`t cheat his customers.

Ashman testified initially that he lost $150 on a trade made after the exchange closed. But under a particularly brutal cross-examination by Raphaelson, Ashman admitted he could have waited until the next morning to make the trade at whatever price the market opened, but didn`t want to risk an even greater loss.